Newsletter March 2003

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Expatax - Newsletter March 22, 2003

1. The obligation to file a tax return

I receive a lot of questions about the obligation to file a tax return. What are the rules?

The tax office will normally send you a tax return when you are in 'the system' and the wage tax you paid in the past year didn't cover the income tax which means you may have to pay extra income tax or claim a refund. If you have received a provisional refund then you will always receive a tax return.

There are several reasons why the wage tax may not cover the income tax:

- company car (25% of the catalogue value is treated as income);
- freelance or business income;
- provisional refund for interest on a mortgage;
- negative income like education costs, alimony, interest on a mortgage, other costs related to buying a property;
- child credits are not included in the salary;
- etc.

If you can claim a refund and you haven't received a tax return then you have to request one yourself or ask Expatax to create one for you. Normally you need a T-form whereby 'T' stands for 'Teruggaaf' or 'Tax refund'. If you came to the Netherlands during the year then an M form is needed whereby 'M' stands for 'Migration'. A T form can be backdated at least 3 years. So up to the end of this year you can still file a tax return for 2000. Depending on the amount of the refund this can even be 1998 and 1999.

The fact that you arrived in the Netherlands (or left of course) during the year will almost always lead to a refund. Three reasons can be given:

- the calculation of the wage tax is based on a (estimated) yearly salary. This is your monthly salary times 12 plus vacation allowance. The payroll administration will use the tax rate which is applicable for the yearly salary. This tax rate may be lower if you worked in the Netherlands less then 12 months.
- tax credits are also calculated monthly. Every month you will receive 1/12 of the personal tax credit and the tax credit you receive because you earn your own income.
- sometimes the 30% ruling has not yet been calculated in the salary since the statement was not received at the end of the year. When the 30% ruling is granted in the beginning of the next year then it can be backdated (if the application process was started within 4 months after you started working) to the first day of work. If the payrolladministration already has been closed for the previous year then the refund must be requested from the tax office in the taxreturn.

If you would like to know whether you can (still) claim a refund please contact us. If you know that you (officially) have to pay extra income tax then you have to request a tax return yourself if you haven't received one before July 1st of the year after the tax year.

The above means that not everybody in the Netherlands needs to file a tax return. Especially for individuals without children who are in the Netherlands for the whole year and have a normally paid job with no other (negative) income the wage tax is the only tax they pay. If you have any questions about this just let us know.

2. Time extension

Everybody who has received a tax return in February must file the return before April 1st. A lot of people will not be able to file the tax return before this date. Please be advised that Expatax can arrange a time extension without any problem. As a registered tax advisor Expatax can use the special ruling which allows a time extension up to March 1st, 2004. To be able to do that we need to send a list with all the sofinumbers we would like to have a time extension for to the taxoffice before April 1st. After
this date every time extension has to be requested individually. If you would like to have a time extension please notify us as soon as possible.

3. Procedure

If you would like Expatax to take care of your tax return please look at this page for the procedure: www.expatax.nl/taxreturn.htm

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Kind regards,

Arjan Enneman
www.expatax.nl